Entry by Mike Swick

Help needed! The consultant & the Buyer

All comments would be greatly appreciated! I have been role playing and feel very comfortable with all discussions with potential clients regarding a consultant interactions with; a homeowner who is not considering selling; one who is considering selling; the FSBO; but I am having an extremely tough time with a buyer. The analogy of the boss giving a specific task to one employee versus a number of employees is excellent and easily understood. The discussion regarding a potential buyer who is not sure wheather they really wish to buy also makes sense. My difficulty (potential mental block) is explaining the advantages of using an accredited consultant for the buyer and explaining how or why a fee(not absolutely necessary but again a potential of working for nothing) is advantageous to them when in reality on paper(assuming my potential competition practices fiduciary counsel earnestly) it appears no different than a Buyer Agency Agreement willingly accept by thousands of agents; but with costs!.

What am I missing?. Please comment!


Excellent question, Mike and I'm hoping some ACREs who consult with buyers will chime in.

I'll throw in my pennies, but I never worked with buyers on a consulting basis, so take my thoughts for what they're worth.

First - your question - WHY would a buyer pay you a fee that he doesn't have to pay the guy down the street unless there's something in it for him?

Do you have an answer for him?

If not, then that's your answer. He wouldn't! Unless there's something really special about you and your business model that buyers are willing to pay "extra" for, there really isn't any logical reason a buyer will pay an upfront fee.

So, no, you aren't missing anything... you are correct! This will be a very tough sell on your part, as you're finding, and it's complicated by the fact that you probably wouldn't go for it either, if you were on the other side, right?

Did you read my blog I posted the other day on this subject... I referenced it here: http://www.theconsultingtimes.com/exchange/forum/archives/2012/01/you-can-sell-anything-you-think-is-a-good-deal-for-the-customer.html

Your thoughts?

We have a company called Redfin in Seattle that offers rebate incentives to attract Buyers.  The Problem with this is Buyers feel their Brokers are inexperienced or they hear the faint ringing of a cash register every time they needed their Broker to meet them at the home prior to closing.  That said, I procured a Buyer’s Broker Model from a company in California that my clients love because it gives them the rebate they desire and gives me a very good hourly wage that only my attorney could appreciate…

I agree to show my clients homes and I base the rebate I give them at closing on the number of homes they view prior to having a signed around offer:

1 to 5 homes: 40 percent rebate

6-10 homes: 30 percent rebate

11-20 homes: 20 percent rebate

21+: I keep the entire commission

I can show 5 homes in an afternoon.  My clients usually know which homes they are interested in and I am brutally honest with them if I feel the home they like may not meet all their needs.  I have a transaction coordinator who processes the paperwork and I do not charge my clients for being at inspections or meeting the contractors.  The average home sale in Seattle is $290,000.00. This is roughly a commission of $9,000.00.  If I find my clients a home the first 5 showings, this is a commission of  $5,400.00 and a rebate of $3,600 to them in closing costs.  I figure from start to finish I will spend a total of 20 hours on the transaction which works out to $270.00 an hour.  I pay my coordinator $15.00 an hour and she spends roughly 4 hours on each transaction. 

I have happy clients, make a good wage and compete with Redfin…  This is a good day!!!


Thanks Jennifer & Keith for your thoughts. You are right Jennifer, I wouldn't buy into it!

More thoughts would be greatly appreciated because as consultants are we only applicable to 50% of the marketplace?

Keith your model interested me  but after pondering on it for a while I have a couple of questions, & comments.

 Do you publish this structure? I definitely see it raising the eyebrows of buyers but at the same time doesn't it just get your competition to match it; or better it, thereby starting the spirol down resulting into a price war or discounting?  Do you get your clients to sign a buyers agency agreement & if so do they typically consent to a min percentage? In this model are you able to show them private listings? Finally if they change their minds or suddenly get a job (if there are any left) transfer, you have work for nothing or do you have a clause where they will reimburse you in some way?

Please understand I am not being critical of this model, but asking these questions to see if it this model, or something similiar can work for me.


I'll let Keith answer your questions to him, but I'd like to know what you mean by "consultants being only applicable to 50% of the marketplace?"

50% is a generalization because i understand we as consultants are valuable to the buyer in a private real estate transaction; but generalizing; there are sellers and their are buyers; typically one for one; and if we have trouble advocating our services as consultants, not realtors; to the buying side of a transaction, we mathematically are only applicable to 50% of the marketplace.

Mike - there's no rule that you can't work with buyers in the traditional manner if you want to, so unless you've committed to running a 100% non-commission/non-contingent business, as a consultant you haven't eliminated a source of business. And remember, there are all kinds of other potential clients you can serve as a consultant who aren't tied to a real estate transaction.

Besides... I didn't mean to imply that you can't work with buyers on a non-contingent basis, but there has to be something in it for THEM to be willing to pay an upfront fee. What might that be?

Why not just give the buyer his / your commission back at closing as an over-payment for services rendered? After all if the buyer is "Paid in full" at time of settlement for your work then the money you receive is simply an over-payment. Or reduce the sales price by the amount of your commission with an addendum that states your buyer has chosen to pay you directly for your services and not part of the contract of sale? Or 3rd, as a reduction to closing costs, a portion to buy down a point on the mortgage (Thank you Lester) some left over as cash back at closing or any combination thereof. The buyer has the MOST to gain and the smallest risk. 


Please know I appreciate your openness and will answer as many of your questions as possible.  I am not even close to the same league as Jennifer of Mollie but I am more than happy to share my experiences with you.

My Buyer’s Model is not perfect and many Traditional Brokers are critical I offer this as an OPTION to my clients.  The majority of my clients choose the Traditional Buyer’s Broker Model which is fine….  I tend to spend less time with Buyers that select the Rebate Model and I actually make more money an hour for my time.  Conventional Brokers will always be critical of any model that fails to conform with the Traditional 100 year old plus model…  I spent many years in the Navy so I am thick skinned when it comes to negative criticism…   I love the lively debates on the site and welcome ideas to better implement this model.  I remember in 1997 when our local multiple went to a Windows based platform for Brokers instead of the huge catalogs that were delivered once a week...  Many Brokers swore they would never adapt to the Windows based system and were quitting real estate…  I heard the same comments when emails/texts took the place of phone calls and PDF documents replaced the fax machine.  Bottom line is I could care less what Traditional Brokers think when it comes to  how I conduct my business or which models I put into practice.  They are ultimately my competition so I hope they never change and continue using the one size fits all model.  I want to provide a good life for my family and offer my clients the best real estate experience ever….  This means offering more service options to my clients and giving them the power to select the model which best meet their needs… 

Here are a few answers to your questions:

1) I do not advertise this model and prices online…  I only share this with fellow ACRE Members and Brokers in the office.  I offer this model to all clients (transparency) but most desire the traditional Buyer Broker services.

2) The majority of my business is through referral so I am not too worried my clients will drop me for a competitor that offers a higher rebate incentive.  The only company I see offering this type of service is Redfin and I would put my experience and customer service skills against them anytime…. 

3) You asked if I thought this could lead to  price wars or discounting…  I do not see this as discounting by any means.  I am making a great wage and I have very happy clients…  Traditional real estate Brokers cringe when they see this model…   Most do not grasp the concept of being compensated less commission for less time invested in the transaction. If you go to Redfin’s site or look at their stats, you will see they are very successful because Buyers today are incredibly savvy and desire more options than the Traditional Model.  I love that Redfin is doing well!! I feel ACRE best equips me to compete with companies like Redfin and meet the growing demand for alternative models than the one size fits all.

4) I do not discriminate when it comes to showing my clients potential properties.  Most FSBO Sellers are more than happy to pay a Buyer’s Broker commission.  I actually later send the FSBO marketing materials on other models available for them to better position their home on the market.

5) I do a pretty good job vetting my clients.  I have not had any problems with clients changing their minds or deciding this was not a good time to purchase a home. 

6)  I feel you bring up an excellent point in regards to charging a retainer fee.  I should implement a retainer fee for those clients I do not know well but I need to think more on this!!

Have an awesome week!!

Glenn great point. In fact I went back to your site (Nucazza.com) to read again your article titled, Realtors Willing to Exchange Commission for No-Risk Deals.

The article speaks volumes about the issues we are speaking about here. I would suggest everyone head over to your site to read the article and bookmark it as a reference. Also Glenn, is this a system that I can use here in Illinois? Can Agents sign up on your site?

Keith - fantastic response and I'm bookmarking it to return to later.

I have a quick story I'd like to tell that isn't really related to this, but somehow I'm reminded of it every time I skim thru this thread...

Back in 2005 and 2006 I owned a discount brokerage firm. We charged a much-lower-than-traditional fee to list a home and provided nearly-full service - in fact, we did more for our listings than many quote/unquote "full service/full fee" agencies did.

Anyway, our listing fee was clearly stated in all our marketing, including our business cards. A local broker was incensed by this and called me up threatening to blackball our listings unless I removed our fee from our marketing... because... our low fee was making it very difficult for her agents to convince their potential sellers that their much-higher fee was justified.

WAH WAH WAH. Hey, if YOU can't justify your fee, is that MY problem?

I love it!!  You were far more polite than I would have been!!

Hi Jennifer, Kieth, William & Glen

I would like to thank you all for your input. A special thanks to Kieth for taking the time to compose his response. Great model and definitely food for thought. I undestand that I can work with buyers , because I am not going 100% non commission; but what I was looking for is to present the public an detail explanation of the consultant's role to the different facets of the marketplace, obviously including buyers and that is where i was hitting a brick wall; from a consultant frame of reference, not an agent's.

The feedback has given me the knowledge that I personally wasn't missing a section of the text and yes it is difficult to explain our advantages to the buyer, unless they are looking to buy privately. Knowing that alone makes the exchange worth while to me and as an added bonus there were other ideas presented that has lots of merit and has my mind working. Thanks again


Mike, I appreciate your comments. I want to thank you in kind and second what you haves stated here. You have reminded me that all the input on this forum has value as do the contributors. 

Thank you Mike.

Hi Mike, I don't know if my model can be applicable in the USA, but here in Czech republic, I use it with quite success. When I have a buyer, I tell him, that I work for flat fee plus 50% from discount that I arrange for him from seller. I sign the Buyer agreement and the Buyer pay me a small amount in advance. This sum is as credit but non-refundable. All sides are satisfied :)

This page contains a single entry by Mike Swick published on January 21, 2012 11:54 AM.

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